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Printed in Belgium Publicly available ANNUAL ACTIVITY REPORT 2019
In accordance with Article 17 of the Statutes of the FCH 2 JU annexed to Council Regulation (EU) No. 559/2014 and with Article 20 of the Financial Rules of the FCH 2 JU.
The annual activity report will be made publicly available following its approval by the Governing Board.
1 FCH JOINT UNDERTAKING | ANNUAL ACTIVITY REPORT 2019
TABLE OF CONTENTS
FACTSHEET...... 5
FOREWORD...... 6
EXECUTIVE SUMMARY ...... 7
INTRODUCTION ...... 11
1. IMPLEMENTATION OF THE ANNUAL WORK PLAN 2019...... 13 1.1 Key objectives 2019 and associated risks...... 13 1.2 Research and innovation activities...... 20 1.3 Calls for proposals and grant information...... 44 1.4 Call for tenders...... 48 1.5 Dissemination and information of project results ...... 49 1.6 Operational budget execution...... 53 1.7 In-kind contributions...... 54
2. SUPPORT TO OPERATIONS...... 61 2.1 Communication activities...... 61 2.2 Legal and financial framework...... 78 2.3 Budgetary and financial management ...... 79 2.4 Procurement and contracts...... 85 2.5 IT and logistics...... 86 2.6 Human resources...... 88
3. GOVERNANCE...... 91 3.1 Governing Board ...... 91 3.2 Executive Director ...... 92 3.3 States Representatives Group...... 92 3.4 Scientific Committee...... 93 3.5 Stakeholders Forum...... 93
2 4. INTERNAL CONTROL FRAMEWORK...... 95 4.1 Financial procedures ...... 95 4.2. Ex-ante controls on operational expenditure...... 95 4.3 Ex-post control of operational expenditure and error rates identified ...... 96 4.4 Audit of the European Court of Auditors ...... 107 4.5 Internal audit ...... 107 4.6 Risk management and conflict of interest...... 107 4.7 Compliance and effectiveness of internal control ...... 108
5. MANAGEMENT ASSURANCE...... 111 5.1 Assessment of the Annual Activity Report by the GB...... 111 5.2 Elements supporting assurance ...... 111 5.3 Reservations ...... 111 5.4 Overall conclusions ...... 113
6. DECLARATION OF ASSURANCE...... 115 ANNEX 1 Organisation chart...... 118 ANNEX 2 Staff establishment plan...... 119 ANNEX 3 Publications from projects...... 120
ANNEX 4 Patents from projects...... 138 ANNEX 5 Scoreboard of Horizon 2020 common KPIs...... 139 ANNEX 6 Indicators for monitoring cross-cutting issues202...... 141 ANNEX 7 Scoreboard of KPIs specific to FCH 2 JU...... 144 ANNEX 8 Draft annual accounts...... 145 ANNEX 9 Materiality criteria...... 146 ANNEX 10 List of acronyms...... 148
3
FACTSHEET
NAME Fuel Cells and Hydrogen 2 Joint Undertaking
a) To contribute to the implementation of Regulation (EU) No. 1291/2013, and in particular the Secure, Clean and Efficient Energy Challenge and the Smart, Green and Integrated Transport Challenge under part III OBJECTIVES of I of Decision 2013/743/EU (b) To contribute to the objectives of the Joint Technology Initiative on Fuel Cells and Hydrogen, through the development of a strong, sustainable and globally competitive FCH sector in the Union
FOUNDING LEGAL ACT Council Regulation (EU) No. 559/2014 of 6 May 2014 – OJ L169/108-129 of 7.6.2014
EXECUTIVE DIRECTOR Bart Biebuyck
Chair: Valérie Bouillon-Delporte Vice-Chair: Patrick Child GOVERNING BOARD Governing Board composition: http://www.fch.europa.eu/page/governing-board
OTHER BODIES States Representative Group, Scientific Committee, Stakeholder Forum
STAFF 24 temporary agents and 3 contract agents
EUR 91.7 million of which EUR 86.1 million allocated to operational activities and EUR 5.6 million to administrative 2019 BUDGET expenses
BUDGET 86 % in terms of commitment appropriations IMPLEMENTATION 98 % in terms of payment appropriations
GRANTS 109 signed for a total value of EUR 541.0 million
STRATEGIC RESEARCH Multi-Annual Work Plan 2014-2021 AGENDA Addendum to the MAWP endorsed by the Governing Board on 15 June 2018
CALL IMPLEMENTATION Number of calls launched in 2019: 1 Number of proposals submitted: 44 Number of eligible proposals: 43 Number of proposals funded: 17 Global project portfolio (since setting up): 155 projects under FP7 (of which 150 closed and 5 open) and 109 signed projects under H2020 (of which 11 closed and 98 open) Number and value of tenders (if any): 3 studies were contracted in 2019 for a total value of EUR 1.5 million
PARTICIPATION, INCLUDING SMES Total number of participations in funded projects: 1,146 of which: % of SMEs: 25 % of SME funding: 31.5
5 FCH JOINT UNDERTAKING | ANNUAL ACTIVITY REPORT 2019
FOREWORD
Racing towards a Clean Hydrogen economy was the theme of our 2019 Stakeholder Forum visualised by the two hydrogen racing cars parked in the heart of Europe. The race towards Europe’s goal of a climate-neutral economy by 2050 using the European Green Deal as a vehicle has begun. Frans Timmermans, the Executive Vice-President of the European Commission sees ‘a pivotal role for hydrogen’ to reach the finish.
During 2019, we continued our focus on the outreach and dissemination of project results to show citizens and policymakers the potential of fuel cell and hydrogen technology and the major achievements that have been realised in this public-private partnership. Central and Eastern European countries remained our focal point and we actively attended several events there.
The regions and cities initiative we started in 2016, numbering 92 regions, was taken to the next level with the setting up of the European Hydrogen Valleys Partnership under the Smart Specialisation platform and the launch of the Project Development Assistance programme for the regions. In addition, the North Netherlands region was successful in our call for proposals to achieve the first hydrogen valley in Europe by 2025. The valley will highlight the sectoral integration and stimulate strong citizen involvement.
With 263 projects, a combined public-private investment of nearly EUR 2.0 billion has been realised since 2008. These investments have produced significant progress in the maturity of the technology, which was demonstrated in our Programme Review Days. This progress and the results from our studies have led to new initiatives from the European Commission, such as the IPCEI and a potential new partnership on Clean Hydrogen. Furthermore, internationally, the latest G20 Declaration and reports by the IEA, IRENA and the Hydrogen Energy Ministerial mention the importance of hydrogen as a vector to decarbonise our societies.
The Hydrogen Roadmap for Europe, released in 2019, calculated that by 2050 fuel cells and hydrogen could create 5.4 million jobs in Europe,
abate 560 million tonnes of CO2 annually and generate a yearly turnover of EUR 820 billion. However, these jobs and growth will not come automatically. Other regions in the world are now starting to invest massively in this technology; up to eight times more than Europe. Thanks in a big part to the FCH 2 JU , the EU has achieved a global leadership position in this sector and the Joint Undertaking will be key to keeping that.
Therefore, it is important to continue to invest heavily in research and innovation and to set up a strong coordination and cooperation structure in Europe. Thanks to its wealth of experience, the FCH 2 JU can take on this role and become the hydrogen knowledge and coordination hub for Europe. To maintain leadership and create jobs and growth in Europe, partnering between policymakers, the private sector and citizens – on every level, local and international – is the answer, which is exactly Europe’s great strength.
In 2019, the FCH 2 JU had the best budget execution ever in its history, reached excellent leverage effects and a low error rate. This demonstrates that it continues to provide an excellent example of a mature, sound and well-controlled environment. This success has been achieved thanks to the hard work and dedication of many people, passionate about tackling climate change by using hydrogen and fuel cells technology, such as colleagues in the European Commission, the Governing Board, the States Representative Group, the Scientific Committee and the many stakeholders who give their valuable inputs on our plans and activities.
Finally, I would like to thank my entire team in the Programme Office who give the best of themselves every day to serve the interests of European citizens. The huge response to the public consultation on a Clean Hydrogen Partnership is a clear recognition in that sense.
Enjoy the read!
Bart BIEBUYCK Executive Director FCH 2 JU
6 EXECUTIVE SUMMARY
2019 was another very dynamic year for the FCH 2 JU, marked by the greater impact made by its projects, progress on initiatives, important events and further development of its outreach activities. Furthermore, achievements in terms of leverage and budget execution reached historical highs, the error rate from H2020 ex-post audits remained low, and the strong internal control environment was confirmed.
Highlights during the year include:
• Continued progress was achieved in all areas, from the demonstration of vehicles to the operation of electrolisers for green hydrogen production, to name but a few, and not forgetting manufacturing processes and research for the next generation of applications, as described under section 1.2.1 of this report and in more detail in the 2019 Programme Review Report1.
Updated maps of FCH projects, a dedicated page on State-of-the-Art (SoA) and MAWP targets2 are available on the FCH website as well as the European Supply Chain map3.
New success stories4 were published covering subjects ranging from creating low-carbon and sustainable solutions, enabling market entry for new products, developing ‘next-generation’ products based on previous research, to opening new markets for European expertise in FCH technology.
• CertifHy 25 project was completed in March 2019 and has built on the momentum of the first phase. It has served as a catalyst for implementing an EU-wide GO scheme for green and low-carbon hydrogen and is a milestone towards a possible hydrogen certification mechanism in the context of the Renewable Energy Directive (RED II).
• The European Hydrogen Safety Panel (EHSP) updated and made public a safety guidance document6 for FCH projects and programmes in Europe. Together with the Joint Research Centre (JRC), it also completed the review and assessment of the events contained in the European Hydrogen Safety Reference Database (HIAD.2.0) extracting the lessons learnt7 and recommendations for future research in this field.
• Building on the work carried out in 2018 under the Regions Initiative and the conclusions of the report ‘Fuel Cells and Hydrogen for Green Energy in European Cities and Regions’8, a number of major developments took place, in particular: (1) The launch in May of the European Hydrogen Valleys Partnership (EH-S3P) under the Smart Specialisation Platform9, which aims to enhance the role of green hydrogen in the European energy transition process. (2) The signature in October of a contract for managing a pilot Project Development Assistance (PDA) facility to help develop detailed project planning in regions and cities with a lower maturity level, paying special attention to Central and Eastern Europe. The aim is to work on project concepts and move them from their current stage to implementation. (3) The inclusion in the AWP2019 (topic FCH-03-1-2019) of an H2 Valley topic aiming to showcase a large demonstration (flagship) project with hydrogen as the energy carrier for various types of use (transport, power, heat and industry). This led to the award of a grant for HEAVENN10, the successful ‘H2 Valley’ signed in December 2019, with an FCH contribution of EUR 20 million and total cost of EUR 82 million.
1 The report will be published in spring 2020 on the FCH 2 JU website: https://fch.europa.eu/page/programme-review-days-2018 2 https://www.fch.europa.eu/soa-and-targets 3 https://www.fch.europa.eu/page/FCH-value-chain 4 https://www.fch.europa.eu/sites/default/files/FCH%202019.4582-WEB-2.pdf 5 https://www.fch.europa.eu/page/certifhy-designing-first-eu-wide-green-hydrogen-guarantee-origin-new-hydrogen-market 6 https://www.fch.europa.eu/sites/default/files/Safety_Planning_for_Hydrogen_and_Fuel_Cell_Projects_Release1p31_20190705.pdf 7 https://www.fch.europa.eu/sites/default/files/Assessment%20and%20lessons%20learnt%20from%20HIAD%202.0.pdf 8 https://www.fch.europa.eu/sites/default/files/181123_FCHJU_Regions_Cities_Final_Report_FINAL.pdf 9 http://s3platform.jrc.ec.europa.eu/home 10 https://cordis.europa.eu/project/id/875090/it
7 FCH JOINT UNDERTAKING | ANNUAL ACTIVITY REPORT 2019
• The FCH organised and attended a wide range of events throughout 2019, from project-oriented events to participation in major exhibitions and outreach events. Many of them provided a full range of communication coverage, including web streaming, promotion on social media, event branding and media engagement. Slido was used at most events organised throughout 2019, with polls and question-and-answer (Q&A) sessions leading to better engagement with the audience. Once again, the Joint Undertaking’s flagship events – the Stakeholder Forum and the FCH 2 JU Awards – were at the centre of both policy and communication efforts.
Stakeholder Forum 2019
Under the title ‘Racing towards a clean hydrogen economy’, the Stakeholder Forum brought together the European Fuel Cell and Hydrogen community and facilitated an open discussion on the impact, achievements and strategic direction of the FCH 2 JU programme, as well as the latest developments in the sector.
The conference enjoyed the participation of high-level representatives from the European Commission, national governments, European industry leaders and international organisations. They included Frans Timmermans, Executive Vice-President of the European Commission, Ditte Juul Jørgensen, European Commission Director-General for Energy, Mauro Petriccione, Director-General for Climate Action at the European Commission and Patrick Child, Deputy Director-General for Research and Innovation in the European Commission.
FCH 2 JU Awards 2019
The Awards were presented at a ceremony at the Royal Museums of Fine Arts in Brussels on 20 November 2019, attended by around 300 representatives from industry, research and EU institutions. The 2019 Awards Ceremony was the second organised by the FCH 2 JU . The winners were chosen by public vote, which mobilised the European fuel cells and hydrogen community around the 24 nominees, 12 for each category (success stories and innovation).
• Significant leverage: In 2019, the leverage effect from only members reached 1.51 (compared to the required 0.57). In other words, for every euro of EU contribution for all signed H2020 FCH 2 JU grant agreements, as at 31 December 2019, members of Hydrogen Europe Industry and Hydrogen Europe Research committed to spend EUR 1.51 either on FCH 2 JU projects or on additional activities.
• Budget execution remained excellent with 86 % in terms of commitment appropriations and 98 % in terms of payment appropriations.
• In 2019, FCH 2 JU achieved sufficient results from H2020ex-post audits to form a solid base for an ex-post pillar of declaration on assurance stemming from an indicative representative error rate of -0.94 % (residual error rate of -0.70 %) on the FCH 2 JU contribution in H2020.
• In 2019, FCH 2 JU was not the subject of an individual dedicated IAS audit. With all recommendations coming from prior audits closed before 2019, the IAS communicated that FCH 2 JU would only be the subject of two rather than three specific internal audits identified in the new Strategic Internal Audit Plan for 2019-2021. This further demonstrates that FCH 2 JU continues to provide an excellent example of a mature, sound and well-controlled environment.
• The smooth administrative functioning of the FCH 2 JU was further enhanced by the introduction of the e-Tendering and e-Submission modules, which significantly simplify the procurement activities.
• The FCH 2 JU Governing Board, the European Commission, Hydrogen Europe and Hydrogen Europe Research pursued strategic analysis and preparation for the future roadmap in the context of the next Framework Programme Horizon Europe and in the international context regarding climate and energy.
In this positive international and European context, it is expected that a future partnership – Clean Hydrogen Europe – will be instrumental in implementation of the clean energy transition, taking into account:
• the release of the International Energy Agency (IEA) report11 in June at the G20 in Osaka, Japan which confirmed the key role hydrogen should play in the energy transition;
11 https://www.iea.org/reports/the-future-of-hydrogen
8 • the publication of the Global Action Agenda of the Tokyo statement12 at the Hydrogen Energy Ministerial in September reaffirming that hydrogen can be a key contributor to clean, safe and affordable energy for the future;
• the identification by DG GROW of ‘hydrogen technologies and systems’ as a key strategic value chain for EU industrial policy13 leading to its recognition as part of the Strategic Forum for Important Projects of Common European Interest (IPCEI)14,
• the announcement of the European Green Deal15 as a priority of the new European Commission and the declaration of Frans Timmermans, Executive Vice-President of the European Commission who sees ‘a pivotal role for hydrogen’ in Europe’s goal of a climate neutral economy by 2050; and
• the strong achievements of the FCH 2 JU summarised here above and further developed in this report.
12 https://h2em2019.go.jp/summary/summary_en.pdf 13 https://ec.europa.eu/growth/content/hydrogen-climate-action_en 14 https://ec.europa.eu/docsroom/documents/37824 15 https://ec.europa.eu/info/sites/info/files/european-green-deal-communication_en.pdf
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10 INTRODUCTION
Council Regulation No. 559/2014 set up the current Fuel Cells and Hydrogen Joint Undertaking (FCH 2 JU) under the Horizon 2020 Framework Programme as a unique institutionalised public-private partnership (IPPP) supporting research, technological development and demonstration (RTD) activities in FCH technologies in Europe, aiming to accelerate their commercialisation by 2020. This demonstrates the EU’s continued confidence and support for FC and hydrogen (FCH) as key technologies (fuel cells as an energy-efficient converter and hydrogen as a clean- energy carrier) for decarbonising Europe’s energy system and creating a secure sustainable energy supply capable of generating new jobs.
Conscious of its dependence on imports of energy resources, mainly from unstable countries, the European Union (EU) has set targets to reduce the related risks. This is stated in the European Commission’s (EC) 2014 Energy Security Strategy16 which focuses on the need for improved energy efficiency as well as on the need to increase the EU’s own energy production, to diversify supply sources and routes, to consolidate its internal energy system, and to protect its critical infrastructure.
At the international level, during the Paris climate conference (COP21) in December 2015, 195 countries adopted the first-ever universal, legally binding global climate deal. The agreement sets out a global action plan to set the world on track to avoid dangerous climate change by limiting global warming to 2 °C, ‘… and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius’.
Underpinning this, the 2015 Communication from the European Commission17 on ‘A Framework Strategy for a Resilient Energy Union with a Forward- Looking Climate Change Policy’ includes – among all lines of action – energy security, solidarity and trust, energy efficiency, decarbonising the economy, and research, innovation and competitiveness.
In November 2016, the EC adopted the ‘Clean Energy for All Europeans’ package18, which included revised legislative proposals covering energy efficiency, energy performance in buildings, renewable energy, the design of the electricity market, security of electricity supply, and governance rules for the Energy Union. In addition, the European Commission Staff Working Document (SWD) on Energy storage published as part of the ‘Second Report on the State of the Energy Union’, on 1 February 201719, outlines the role of energy storage in relation to electricity, presents the advantages of different technologies and innovative solutions in different contexts, and discusses further possible policy approaches. It has been acknowledged that energy storage, including hydrogen-storage-based solutions, has not yet developed its full potential in the energy markets. Developing affordable and integrated energy-storage solutions is highlighted as a priority to facilitate and enable the transition to a low-carbon energy system based largely on renewables.
On 8 November 2017, the European Commission also proposed to update the EU Gas Directive20 to ensure that all major gas pipelines entering EU territory comply with EU rules, are operated with the same levels of transparency, are accessible to other operators, and are operated in an efficient way. The proposal aims to improve the functioning of the EU internal gas market, increase competition between suppliers, and boost Europe’s energy security. The role of hydrogen is also mentioned as one of the solutions to decarbonise the EU gas network and increase security of supply.
On that same date, the European Commission adopted and published the so-called ‘Clean Mobility Package’ which sets out to reinforce the EU’s global leadership in clean vehicles by proposing new targets for EU fleet-wide average CO2 emissions from new passenger cars and vans to help accelerate the transition to low- and zero-emission vehicles. As part of the package, an action plan and investment solutions were proposed for the trans-European deployment of alternative fuels infrastructure, which includes hydrogen as one of the clean fuels for transport. The aim is to raise the level of ambition of national plans, to increase investment, and to improve consumer acceptance. In addition, a proposal was made to amend the Clean Vehicles Directive to promote clean mobility solutions in public procurement tenders, thereby providing a solid boost for demand and the further deployment of clean mobility solutions, including fuel cell vehicles.
Furthermore, in 2018, for the first time there was a global agreement within the International Maritime Organization (IMO) on targets to reduce greenhouse gas (GHG) emissions from maritime transport by a minimum of 50 % by 2050 and phase them out completely before the end of the century. This represents a substantial challenge and the possibility of using fuel cells, together with hydrogen or other zero-carbon fuels, as a very promising energy source for large-scale shipping is increasingly being considered.
16 European Energy Security Strategy, (SWD(2014) 330 final). 17 COM(2015)80, Energy Union Package. 18 Clean Energy for All Europeans package: https://ec.europa.eu/energy/en/news/commission-proposes-new-rules-consumer-centred-clean-energy-transition 19 https://ec.europa.eu/energy/sites/ener/files/documents/swd2017_61_document_travail_service_part1_v6.pdf 20 https://ec.europa.eu/info/news/commission-proposes-update-gas-directive-2017-nov-08_en
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On 18 September 2018, the use of hydrogen as a future‑oriented energy form was among the items on the agenda of the informal meeting of EU energy ministers21. ‘The Austrian Presidency of the Council of the European Union proposed a hydrogen initiative that many Member States approved of and signed,’ said Elisabeth Köstinger, chair of the EU energy minister meetings. ‘Under this initiative, the signatory states commit to continuing research and investment in the production and use of hydrogen as a future‑oriented technology,’ she added. EU Commissioner Miguel Arias Cañete also welcomed the initiative of the Austrian Presidency of the Council of the European Union: ‘Green hydrogen offers significant potential for the decarbonisation of the European economy. The Commission warmly welcomes the hydrogen initiative as it will further harness the innovative drive across the EU.’
In November 2018, the European Commission published the 2050 long-term strategy22 calling for a climate-neutral Europe by 2050 (COM (2018) 773). The strategy shows how Europe can lead the way to climate neutrality by investing in realistic technological solutions, empowering citizens, and aligning action in key areas such as industrial policy, finance or research – while ensuring social fairness for a just transition. ‘The eight scenarios build upon no-regret policies such as strong usage of renewable energy and energy efficiency. Five of them look at different technologies and actions which foster the move towards a net-zero greenhouse gas economy. They vary the intensity of application of electrification, hydrogen and e-fuels (i.e. power-to-X) as well as end-user energy efficiency and the role of a circular economy, as actions to reduce emissions.’ In all these pathways, electricity consumption increases although there are notable differences. ‘Pathways that focus more on electrification in end-use sectors also see the need for high deployment of storage (six times today's levels) to deal with variability in the electricity system, but pathways which deploy more hydrogen require more electricity to produce the hydrogen in the first place.’ It also concludes that: ‘Pathways more reliant on carbon-free energy carriers require less transformation and investment in the end-use sector, but also the highest investment needs in the energy supply sectors’. Consequently, ‘further significant steps in research and development are needed in the production of decarbonised fuels as well as vehicle technologies such as batteries, fuel cells and hydrogen gas engines’. Furthermore, ‘EU research should focus on transformational carbon-neutral solutions in areas such as electrification (renewables, smart networks and batteries), hydrogen and fuel cells, and energy storage.’
In line with its ultimate long-term strategy and following the political agreement reached by the Parliament and the Council in June 2018, the revised Renewables Energy Directive (RED II)23 establishes a binding EU target of at least 32 % for 2030, with a view to increasing this figure in 2023. In this context, it calls on Member States to establish a methodology for guarantees of origin of renewable gases (including hydrogen) and subsequently a certification system.
In December 2018, Member States also submitted their draft integrated National Climate and Energy Plans (NECPs)24 for the period 2021-2030. Several have already made ambitious plans based on (renewable) hydrogen to decarbonise their entire economy. The final plans had to be submitted by the end of 2019.
In June 2019, the Common rules for the internal market for electricity Directive25 entered into force. It establishes common rules for the generation, transmission, distribution, energy storage (including hydrogen) and supply of electricity, together with provisions for consumer protection, with a view to creating truly integrated competitive, consumer-centred, flexible, fair and transparent electricity markets in the EU. Within the same package, Regulation (EU) 2019/943 on the internal market for electricity26 entered into force which sets ‘fundamental principles for well-functioning, integrated electricity markets, which allow all resource providers and electricity customers non-discriminatory market access, empower consumers, ensure competitiveness on the global market as well as demand response, energy storage and energy efficiency, and facilitate aggregation of distributed demand and supply, and enable market and sectoral integration and market-based remuneration of electricity generated from renewable sources’.
As regards all the policy developments in 2019, as described above, the FCH 2 JU has addressed them through many actions, research and demonstration activities both in line with the above-mentioned EU-wide objectives as well as with all of its objectives as listed in Council Regulation 559/2014 of 6 May 2014. The Annual Activity Report (AAR) highlights the main activities and the achievements of the FCH 2 JU in 2019 in line with the Annual Work Plan (AWP) 2019 adopted by the Governing Board (GB) on 17 December 2018.
21 https://www.eu2018.at/latest-news/news/09-18-Informal-meeting-of-energy-ministers.html 22 https://ec.europa.eu/clima/policies/strategies/2050 23 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2018.328.01.0082.01.ENG&toc=OJ:L:2018:328:TOC 24 https://ec.europa.eu/energy/en/topics/energy-strategy-and-energy-union/governance-energy-union/national-energy-climate-plans 25 https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32019L0944&from=EN 26 https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32019R0943&from=EN
12 01 IMPLEMENTATION OF THE ANNUAL WORK PLAN 2019
1.1 KEY OBJECTIVES 2019 AND ASSOCIATED RISKS
The overall objective of FCH 2 JU is to implement an optimal research and innovation programme at the EU level to develop a portfolio of clean and efficient solutions that exploit the properties of hydrogen as an energy carrier and fuel cells (FC) as energy converters to the point of market readiness. This will provide feedback and related support to EU policies on sustainable energy and transport, climate change, the environment and industrial competitiveness, as embodied in the Europe 2020 strategy, and job creation. It will also help to achieve the EU’s overarching goal of smart, sustainable and inclusive growth. The overall direction of the programme is guided by the multi-annual plans: Multi-Annual Implementation Plan (MAIP) for 2008-2014 under FP7 and MAWP for 2014-2020 under Horizon 2020. These plans specify targets for the state of FCH technologies in Europe (covering cost, durability and performance) and specific key performance indicators (KPIs). The programme’s progress and therefore scientific/technological achievements are always assessed according to the progress towards achieving these targets and KPIs. As the technology has progressed substantially in recent years and new applications have begun to emerge, these KPIs (fixed in 2014) were revised and included in an addendum to the MAWP, endorsed by the FCH 2 JU GB on 15 June 2018. The main objectives and achievements are presented in Section 1.2.
Leverage effect in H2020
A key objective and measure of the JUs’ success is their capacity to leverage private funding.
On the one hand, calculation of the leverage effect takes into account the operational component (private financial and in-kind contributions to projects for each euro committed by the European Commission) and, on the other hand, any additional leverage (private contributions to additional activities not directly linked to the project portfolio but contributing to the JUs’ overall objectives).
The Council Regulation establishing the FCH 2 JU27 explicitly mentions the minimum target leverage effect over the whole 2014-2020 period at 0.5728.
In 2019, the FCH 2 JU aimed to demonstrate to the Council and European Parliament that the overall commitment of the industry and research has significantly surpassed the minimum requirement of EUR 380 million for H2020.
By the end of 2019, under the H2020 programme, the FCH 2 JU had supported 109 projects for a combined public-private investment of more than EUR 1 billion.
27 Council Regulation (EU) No. 559/2014 of 6 May 2014 establishing the Fuel Cells and Hydrogen 2 Joint Undertaking. 28 Total minimum contribution from members other than the EU (EUR 380 million) over the total EU contribution (EUR 665 million).
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CHART 1.1.1: TOTAL COMMITTED PRIVATE AND PUBLIC INVESTMENT IN FCH 2 JU ACTIONS OVER 2014-2019 IN EUR MILLION
Total private-public invstments in FCH 2 JU actions per Calls 2014-2019 in million EUR
250 242.48 200 228.03 194.54 150 156.87 100 123.27 123.12
50
0 2014 2015 2016 2017 2018 2019
In addition, in 2019, industry and research members surpassed the threshold of EUR 665 million of additional activities certified (covering the years 2014-2018).
This demonstrates the sector’s huge willingness to invest.
For a detailed calculation of the leverage-effect formula, the following contributions made by members other than the EU and their constituent or affiliated entities have been considered:
• Contributions to the administrative costs of the FCH 2 JU;
• Co-financing required to carry out research and innovation actions supported by the FCH 2 JU (i.e. contributions to indirect actions through co-funding FCH 2 JU projects, the so-called ‘IKOP’);
• Contributions towards additional activities by members other than the EU or their constituent or affiliated entities, as specified in an additional activities plan. These additional activities (so-called ‘IKAA’) should represent contributions to the broader Fuel Cells and Hydrogen Joint Technology Initiative and the sector as a whole.
The amounts of each contribution, as at 31 December 2019, are detailed in the tables below.
Administrative costs
TABLE 1.1.1: FINANCIAL CONTRIBUTIONS OF THE MEMBERS TO FCH 2 JU ADMINISTRATIVE COSTS IN 2014-2019 CONTRIBUTIONS TO RUNNING INDUSTRY GROUPING RESEARCH GROUPING TOTAL COSTS RECEIVED BY 31 DECEMBER 2019 / YEAR CASH IN EUR CASH IN EUR CASH IN EUR 2014 259,244 42,203 301,447 2015 412,288 67,116 479,404 2016 401,937 65,432 467,369 2017 48,812 7,946 56,758 2018 2,014,054 327,869 2,341,923 2019 2,308,907 375,869 2,684,776 Total 2014-2019 5,445,242 886,435 6,331,677
14 The lower amounts of cash contributions until 2017 can be explained by the fact that the administrative costs were also funded by Seventh Framework Programme (FP7) contributions.
In-kind contributions in operational activities (IKOP)
The table below provides an overview of private-sector co-financing in all FCH 2 JU projects signed up to 31 December 2019. The total amounts committed per FCH 2 JU member, per all private partners and per the EU are broken down according to individual Calls.
When comparing total private contributions in projects to the total EU contribution, we can observe a close parity of 1:1 (EUR 537 million of EU committed contribution vs. EUR 532 million of private contributions).
TABLE 1.1.2: IN-KIND CONTRIBUTIONS AND EU CONTRIBUTIONS FOR GRANTS UNDER CALLS 2014-2019 CALL NUMBER OF TOTAL EU COMMITTED COMMITTED TOTAL TOTAL PROJECTS CONTRIBUTION IN-KIND IN-KIND COMMITTED COMMITTED (A) CONTRIBUTIONS CONTRIBUTIONS PRIVATE EU + PRIVATE (IKOP) FROM FROM NON- CONTRIBUTIONS CONTRIBUTIONS MEMBERS (B) MEMBERS (C) (D = B + C) (E = A + D)
YEAR IN EUR IN EUR IN EUR IN EUR IN EUR Call 2014 15 80,456,120 26,670,180 16,139,012 42,809,193 123,265,313 Call 2015 15 107,234,987 61,724,104 59,074,494 120,798,599 228,033,586 Call 2016 19 93,974,248 6,786,153 93,782,331 100,568,484 194,542,732 Call 2017 24 114,318,293 16,093,338 112,064,517 128,157,855 242,476,147 Call 2018 19 71,610,138 10,190,872 41,316,583 51,507,455 123,117,592 Call 2019 17 69,129,862 14,793,889 72,947,702 87,741,592 156,871,453 TOTAL 109 536,723,647 136,258,538 395,324,639 531,583,177 1,068,306,824
Considering that funding rates in projects follow H2020 rules (i.e. up to 100 % of direct costs in research and innovation actions (RIAs) and coordination and support actions (CSAs) and up to 70 % in innovation actions (IAs)), these private contributions are significantly higher than was initially foreseen. This is due to the fact that most of the largest demonstration projects have effective funding rates lower than 70 % (of direct costs), as they are very close to the market.
In-kind contributions in additional activities (IKAA)
The underlying purpose of additional activities is to demonstrate private investments in the sector and ensure a balanced contribution is made by both the private and public entities in the context of the partnership.
In 2019, members of Hydrogen Europe and Hydrogen Europe Research and their affiliate entities jointly delivered a cumulative amount of EUR 667 million certified IKAA (for the period 2014-2018), which is significantly more than the minimum requirement for IKAA of EUR 285 million, as defined in the Council Regulation.
In addition, for 2019, the members estimated the certification of an additional EUR 238 million of extra activities, demonstrating a strong and continuous commitment to the goals of the partnership.
IKAA 2014/2015 2016 2017 2018 2019 TOTAL
IN EUR MILLION Certified IKAA as at 31 December 2019 217.56 164.65 107.34 177.45 - 667.00 IKAA Preliminary Report 2019* 238.26 238.26 TOTAL IKAA 217.56 164.65 107.34 177.45 238.26 905.26
* Estimated figures for the year 2019, reported to the FCH 2 JU Governing Board based on information available as at 31 January 2020, subject to certification later in 2020
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More details on in-kind contributions for additional activities can be found in section 1.7.
Values of leverage effect for the Calls concluded by December 2019
The following values have been taken into account in order to combine an operational component and additional activities part of private investments over public investment in the FCH 2 JU:
TABLE 1.1.4: VALUES OF LEVERAGE EFFECT AS AT 31 DECEMBER 2019 COMPARED TO THE OVERALL HORIZON 2020 TARGETS29
TARGET CONTRIBUTIONS FOR LEVERAGE EFFECT CONTRIBUTIONS AS 29 CALCULATION IN MIL. EUR PER FCH 2 JU COUNCIL FORMULA A FORMULA B1 FORMULA C REGULATION EU 665 537 537 537 Members Administrative expenses (paid 6 6 6 as at 31 December 2019) IKOP (actual & committed 136 136 136 as at 31 December 2019) IKAA certified (2014 – 2018) 667 667 667 IKAA estimated (2019) 238 Total members 380 809 809 1047 Non-Members Contributions to actions 395 395 (Call 2014 – 2019) Sub-total Members + n/a n/a 1204 1443 Non-members Leverage effect 0,57 1,51 2,24 2,69
(A) Leverage effect – members only as at 31 December 2019 = (6.33 + 136.11 + 667.00 / 536.72) = 809 / 537 = 1.51
In other words, for every EUR 1 of EU contribution for all FCH 2 JU signed H2020 grant agreements up to 31 December 2019, members of Hydrogen Europe Industry and Hydrogen Europe Research committed to spend EUR 1.51 either on FCH 2 JU projects or in certified additional activities.
(B) Leverage effect – all private partners as at 31 December 2019 = (6.33 + 531.58 + 667.00 / 536.72) = 1 205 / 537 = 2.24
This formula is fully aligned with the method used in the SWD accompanying the Interim Evaluation of the PPPs30.
Compared to the previous formula (A), in addition to the contributions from members other than the EU, it also includes contributions to FCH 2 JU projects from non-members of Hydrogen Europe or Hydrogen Europe Research members.
In other words, for 1 EUR of EU contribution for all FCH 2 JU signed H2020 grant agreements until 31 December 2019, the private partners committed to spend EUR 2.24 either on FCH 2 JU projects or in certified additional activities.
(C) Leverage effect – all private partners as at 31 December 2019 (including estimated additional activities of members for 2019) = (6.33 + 531.58 + 905.26 / 536.72) = 1 443 / 537 = 2.69
This third calculation also encompasses additional activities of members for 2019. In other words, for EUR 1 of EU contribution for all FCH 2 JU signed H2020 grant agreements until 31 December 2019, the private partners committed to spend EUR 2.69 either on FCH 2 JU projects or in additional activities.
While the definite amount of leveraged funding will only be known at the end of the JU’s operations, current values for the leverage effect point to private-sector committed funding that already exceeds the set targets by as much as four times the minimum.
29 http://ec.europa.eu/research/evaluations/pdf/20171009_a187_swd.pdf, page 44, Table 12. 30 http://ec.europa.eu/research/evaluations/pdf/20171009_a187_swd.pdf, page 44, Table 12.
16 CHART 1.1.2: TOTAL COMMITTED PRIVATE AND PUBLIC INVESTMENT IN FCH 2 JU OVER THE PERIOD OF 2014-2019 (COMMITTED PRIVATE FUNDING IN ALL SIGNED FCH 2 JU ACTIONS AND CERTIFIED ADDITIONAL ACTIVITIES 2014-2018) UP TO 31 DECEMBER 2019
1204.91
536.72
Leverage effect 2.24
EU Private
Risk assessment – 2019
Risk management is a crucial part of the strategic decision-making process. Robust risk management frameworks help to ensure that taxpayers ‘money is used effectively and efficiently, that potential risks to achieving objectives are identified in a timely fashion and that appropriate mitigating action is taken.
On 16 August 2018, the FCH 2 JU Governing Board adopted a new Internal Control Framework (ICF) – referring to document ARES (2018)4420458 stemming from the most updated internationally acknowledged COSO model of internal control (see the illustration below), in line with the EC’s ICF.
In 2019, the main elements of the transition to the new ICF which were required to be observed were:
• 17 principles are more evenly spread over 5 components (as opposed to older internal control standards where most standards were linked to the ‘control activities’ component);
• the five components must operate together in an integrated manner – therefore, a risk assessment exercise should be conducted in conjunction with other components;
• four interlinked principles of the ICF must be present and functioning under the ‘risk assessment’ component which specifies suitable objectives, identifies and analyses risk, assesses fraud risk and identifies and analyses significant change.
COMMITTEE OF SPONSORING ORGANIZATIONS OF THE TREADWAY COMMISSION (COSO) MODEL OF INTERNAL CONTROL – INTEGRATED FRAMEWORK
Source: https://www.coso.org/Documents/990025P-Executive-Summary-final-may20.pdf
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To enable the requirements of the four main principles for the ‘risk assessment’ component to be fulfilled, the following guiding questions were incorporated into the annual risk management exercise, conducted in October 2019, whereby the FCH 2 JU team assessed risks and responses to those risks in terms of the action plans presented in the AWP 2019:
• Are the risks and action plans identified in the previous year’s exercise and presented in the AWP 2019 still relevant?
• Are the Programme Office (PO) objectives clearly set and up to date? Are there any significant risks to the achievement of AWP/ MAWP objectives that emerged during the course of this year?
• Are there any fraud-related risks which are not covered by controls in place?
• Are there any significant changes in the external/internal environment that can have a significant impact on our organisation?
The aim of this annual exercise was to identify risks that could harm achievements of the FCH objectives, including (among others) operational, financial and compliance risks.
During the exercise, the following aspects of all the risks presented in AWP 2019 were assessed:
1. Relevance of the risk -> is the risk still present? Has it materialised? 2. Rating the risk -> did the rating (in terms of impact/likelihood) increase or decrease? 3. Relevance and fulfilment of the action plan -> should we continue/expand/reduce action plans?
Based on internal discussions involving all personnel in the organisation, the risks were either removed (when considered no longer relevant) or modified, while the action plans were reviewed for adequacy and completeness.
The table below provides a summary of the outcome of the exercise on risks and fulfilment of the action plans, as at 31 December 2019:
TABLE 1.1.5: FULFILMENT OF THE ACTION PLANS RISK IDENTIFIED – AWP 2019 ACTION PLAN – AWP 2019 STATUS AS AT 31 DECEMBER 2019 Due to Brexit, programme participation by UK Follow developments closely; maintain active During 2019, the participation of UK-based entities (currently representing a significant part dialogue with the EC. entities declined, although not dramatically. of FCH 2 JU funding) at the application stage There is more clarity in the process (the Brexit and during project execution could be adversely withdrawal agreement). There is only one more affected, including fluctuations in project budgets Call left in H2020 so the risk level has been and commitments from UK-based companies. lowered to medium. Business continuity risk in the case of key staff In case of the absence of key staff, FCH 2 JU Reducing the risk to low. Having taken measures turnover due to the JU’s lean structure. ensures appropriate back-up solutions in the short in 2019, the FCH did not experience any term. In the medium term, FCH 2 JU is prepared to increased turnover during the year. Back-up hire short-term temporary contract people plans and on-the-job training, including job- (e.g. interims) to ensure full business continuity. enrichment opportunities were explored. Priority training and efficiency training were provided. Other potential measures should be explored. Timely execution and closure of the ex-post For H2020 audits, an active dialogue via regular Reducing risk to low. FCH addressed the issue and audits for H2020 (including less control over participation on joint meetings has been suggested appropriate measures for monitoring the the H2020 ex-post audit process due to the established with the CIC’s Common Audit Support process in a letter to the director of the Common transfer of the responsibility to the Common unit. JUs’ horizontal issues are addressed by Implementation Centre (CIC). On receipt of the Implementation Centre (formerly Common cooperation with other JUs. letter, CIC replied by streamlining the process and Support Centre) at the EC, which could weaken prioritising the JUs' audits, acknowledging a priority the assurance of the Executive Director. Timely monitoring and actions are ensured closure by the need for a separate discharge. via regular dialogue between the Executive Director and Internal Control and Audit manager. In case of prolonged audits, those are closely Monitoring function of the H2020 audits should be monitored by FCH and discussed with responsible further enhanced via SYGMA/COMPASS workflows. EC personnel, with no delays.
SYGMA/COMPASS workflows for audit process were introduced and put to use in 2019 which further improved the monitoring of the audit status. Full functionality of the SYGMA/COMPASS based on agreed working arrangements is expected in 2020.
18 Representative error rate may increase due to Introduction of the targeted ex-ante controls Since FCH is still at the beginning of the H2020 the simplified ex-ante controls under H2020 for the projects/ beneficiaries with an identified ex-post audit campaign, and taking into account agreed horizontally for the research family. higher inherent risk. pressures from the EC and European Court of Auditors (ECA) to reduce audit samples, the Significant representative error rates in H2020 Application of the feedback from ex-post audits effect of a few negative errors may have a lasting due to decreased ex-ante controls. and lessons learnt on ex-ante controls. effect on the overall representative error rate.
Consequently, risk of receiving a qualified opinion Reinforcement of communication campaign with Controls at ex-ante level remain very limited and not getting the discharge from the European introduction of financial webinars. and simplifications introduced by H2020 did not Parliament due to fact that the Court of Auditors’ significantly reduce the overall RTD-level error rate. threshold for representative error rate stays at 2 %. A leak of confidential data from projects to Closely follow recent developments in IT tools The risk no longer exists since FCH, together the public and a breach of confidentiality by participating in the dedicated Dissemination with other JUs, has taken appropriate measures clauses signed by the Authorising Officer and Exploitation Network (D&E-Net) working to safeguard data confidentiality. Sensitive with FCH 2 JU beneficiaries due to the lack groups. data remain confidential at FCH level. The of assurance coming from the CIC in the issue of access to confidential data remains implementation of the Dissemination Strategy Continuous dialogue with the CIC in order to to be resolved under the new Horizon Europe (due in particular to the incorrect design of the reach an agreement on the treatment Framework Programme. IT tools which are intended to handle of confidential data and related liabilities. confidential data in H2020). Further to his action, a letter was sent to the director of the CIC (Ref. Ares(2019)4123649 – 28/06/2019) concerning access to JU project results and confidential information. Disruption of operations due to the incorrect Back-up systems are in place to mitigate loss Level of the risk was reduced to low. Proper functioning of the IT tools, their continuous of data. training and continuous improvements in using development and failure of the IT equipment. the IT tools, including new tools, is envisaged. Regular follow-up is performed on the IT issues There were no instances of disruption of raised via tickets. operations due to IT-related failures.
Participation in training for new software and Business continuity plans are in place and fully tools introduced via CIC/locally. tested. Mock test of the plans will be carried out on an annual basis. Ensure back-up and proper documentation for the tools developed internally. Some internally developed tools are scheduled to be replaced by EC tools in 2020 to ensure appropriate back-up, maintenance support and problem resolution.
Since there was an instance where the knowledge-management tool did not function for a period of one month, the service provider contract management has been revised and strengthened to avoid repetition in 2020. Appropriate back-up systems were put in place.
The outcome of the 2019 risk assessment workshop on new or continuing risks for 2020 are included in the AWP 2020.
In 2019, in addition to a regular risk assessment exercise, FCH 2 JU participated in a ‘peer review’ exercise which brought together all decentralised agencies to discuss the critical risks identified by each of them individually. Agencies working in the same area or facing similar types of risks were encouraged to share their risk assessments to enable an exchange of best practices on methodology, helping to promote coherence in the identification and assessment of risks and in developing responses to them.
FCH 2 JU participated in this peer review exercise with its risk identified in 2018 in one of the six clusters, the Move and Energy Cluster.
As a result of this exercise (in which 32 agencies participated), and thanks to the feedback gathered, FCH 2 JU refined its risk assessment process and, in its action plan for AWP 2020, took inspiration from the best practices developed by the other services.
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1.2 RESEARCH AND INNOVATION ACTIVITIES
1.2.1 SCIENTIFIC AND TECHNOLOGICAL ACHIEVEMENTS
FCH 2 JU demonstration projects currently deploy over 2 000 light-duty vehicles, more than 84031 of which were already in operation in 2019 (while the rest are planned for the coming years within the projects that are still running). Over the last year, the recently finished SWARM32 project has successfully deployed 13 small, low-weight hybrid electric-hydrogen vehicles in three EU regions. H2ME and H2ME2 are successfully continuing their activities, having deployed 124 cars in 2019, while the ZEFER33 project has been working to demonstrate viable business cases for captive fleets of FCEVs (fuel cell electric vehicles) such as taxi, private hire and police services. The project managed to deploy 71 light-duty vehicles used as taxi fleet in Paris and Brussels as well as police cars in London.
Based on data collected in 2019 in TRUST (Technology Reporting Using Structured Templates) on the performance of 378 cars (running in 2018), these vehicles drove at least 5.2 million kilometres (km) for a reported consumption of 57 tonnes of hydrogen. In comparison to 2017 figures of 1.83 million km driven and the consumption of 23 tonnes, this significant increase is the result of taxi fleet operations and the more intensive use of cars. In total, FCH 2 JU-funded cars34 have now driven a total of almost 10 million km and accumulated over 80 tonnes of H2 since 2016. The average fuel consumption of 1.17 kilogramme (kg) per 100 km35 is close to the MAWP 2020 target (1.15 kg per 100 km) and therefore it could be claimed that this target has been achieved. The average vehicle availability reached 99.7 % in 2018 which means the expected MAWP 2020 targets for availability (98 %) and fuel cell system durability (5 000 hours) have also been accomplished36. The cars are ready for commercialisation with a driving range of up to 594 km and over 150 000 km travelled by one single car in FCH 2 JU projects.
FIGURE 1: DISTRIBUTION OF FCEV DEPLOYED BY FCH 2 JU DEMONSTRATION PROJECTS